Ex-partner charges Oracle with waging 'systematic attack' against third-party support

Chris Kanaracus |
Feb. 8, 2013

Former Oracle partner CedarCrestone is alleging the vendor has engaged in an "unlawful and systematic attack" against the third-party support market and has a monopoly on support revenue.

Former Oracle partner CedarCrestone is alleging the vendor has engaged in an "unlawful and systematic attack" against the third-party support market and has a monopoly on support revenue.

Oracle terminated CedarCrestone's partner license last year and filed a lawsuit claiming it was providing third-party support for Oracle's software in an illegal manner. The allegations were similar to those Oracle lodged against former SAP subsidiary TomorrowNow and Rimini Street, two other third-party support providers.

CedarCrestone had been providing implementation services for Oracle applications as well as tax and regulatory updates for the software. The latter is of primary interest to customers that go off vendor support and contract with a third party, as they want to keep their systems in compliance but have little desire to upgrade, which is only possible legally with vendor-provided maintenance.

Oracle's suit claimed that CedarCrestone was using Oracle's own updates as a "starting point," and that it lied to customers, saying it had developed them independently and wasn't in any violation of intellectual property. CedarCrestone also used unauthorized copies of Oracle software, according to the suit, which is filed in U.S. District Court for the Northern District of California.

In a response filed last month, CedarCrestone denied it engaged in any "'misappropriation' or "stealing" of any Oracle intellectual property, any unfair competition against Oracle, or any wrongdoing of any kind." CedarCrestone also maintains Oracle had no right to terminate its partnership.

Moreover, Oracle has unlawfully achieved an "overwhelming monopoly share" in what otherwise would be a free market for tax and regulatory updates on its software, according to CedarCrestone.

By offering tax and regulatory updates only in tandem with its software and software updates, "Oracle is able to charge prices ... that are significantly higher than the competition," it adds. This "unlawful tying" has done harm to CedarCrestone, according to its suit.

In addition, "for many customers who use older versions of [Oracle's] PeopleSoft applications, the tax and regulatory support and updates offered by Oracle are not even compatible with those customers' software," CedarCrestone's response states.

But in a filing this week, Oracle asked the court to dismiss CedarCrestone's argument.

"As a matter of law, there is no customer lock-in because customers have all the information they need to make an informed decision at the time of the initial license sale and that Oracle has not changed its maintenance program policies after the fact," the filing states. "If customers don't like Oracle's maintenance pricing and policies, they don't have to buy Oracle software."

"Nothing in antitrust law or economics requires a firm to offer an a la carte menu of every conceivable component of its products and services just because a customer might occasionally wish to purchase some of them separately, or to supply them itself," Oracle added. "To the contrary, antitrust law presumes that if a bundled offering is unwanted, the market will take care of the problem."